The High Points of Superfreakonomics
I just read my advance copy of Superfreakonomics. Overall, it’s better than the original. It’s still cutesy, but stronger in the “who cares?” factor.
The highlight: “What Do Al Gore and Mount Pinatubo Have in Common?,” a surprisingly skeptical look at global warming, and a shockingly positive defense of geoengineering. Levitt and Dubner don’t seem ready for the Pigou Club:
But when it comes to actually solving climate-change externalities through taxes, all we can say is good luck. Besides the obvious obstacles – like determining the right size of the tax and getting someone to collect it – there’s the fact that greenhouse gases do not adhere to national boundaries… Thus, global warming.
In any case, why bother with taxes when we can fix warming for peanuts? “Budyko’s Blanket could effectively reverse global warming at a total cost of $250 million. Compared with the $1.2 trillion that Nicholas Stern proposes spending each year to attack the problem, IV‘s idea is, well, practical free.”
L&D’s response to Al Gore is worth the Amazon price. But in case you can’t spare the $16.19:
Al Gore, meanwhile, counters with his own logic. “If we don’t know enough to stop putting 70 million tons of global-warming pollution into the atmosphere every day,” he says, “how in God’s name can we know enough to precisely counteract that?”
But if you think like a cold-blooded economist instead of a warm-hearted humanist, Gore’s reasoning doesn’t track. It’s not that we don’t know how to stop polluting the atmosphere. We don’t want to stop, or aren’t willing to pay the price.
There’s also quite a bit of Hansonian displeasure with medicine, including an entertaining re-telling of the tale of Semmelweis, and some eye-opening cost-benefit analysis of chemotherapy:
More than $40 billion is spent worldwide each year on cancer drugs… The bulk of this spending goes to chemotherapy, which is used in a variety of ways and has proven effective on some cancers, including leukemia, lymphoma, Hodgkin’s disease, and testicular cancer, especially if these cancers are detected early.
But in most other cases, chemotherapy is remarkably ineffective. An exhaustive analysis of cancer treatment in the United States and Australia showed that the five-year survival rate for all patients was about 63 percent but that chemotherapy contributed barely 2 percent to this result. There is a long list of cancers for which chemotherapy has zero discernible effect…
They might have gone a step further and said, “Overall, prayer is better than chemo. At least prayer causes no pain.” Or if you’re a Breaking Bad fan, “Walt was right!”
My main complaint about the book appears in the chapter “Why Should Suicide Bombers Buy Life Insurance?” L&D guide readers through terrorism profiling, and report that lack of life insurance is predictor of terrorism. Smart terrorists will therefore buy a policy to help avoid detection. So far, so good.
But when they’re looking for a rational choice explanation, L&D fall back on a popular myth: “[L]ife insurance companies don’t pay out if the policyholder commits suicide. So a twenty-six-year-old family man who suspects he may one day blow himself up probably isn’t going to waste money on life insurance.” As far as I have been able to determine, suicide exemptions are normally brief. Two years is typical throughout the OECD. In the U.K., where the profiler works, there are some complexities, but the exemption is roughly 1-2 years.
Bottom line: Terrorist family men have extra incentive to buy insurance. The fact that they don’t is a new puzzle for the world’s freakonomists to solve. Could the reason be that terrorists have costly misconceptions about life insurance as well as the afterlife?
Admittedly, L&D are so clever I’m slightly worried that the myth of the strong suicide exclusion will turn out to be true after all. Either way, their latest book passes one of my main tests for worthiness: If everyone read Superfreakonomics and believed it, the world would change for the better.